On April 28, the Financial Conduct Authority (FCA) launched a consultation paper (CP21/9), alongside HM Treasury, on changes to the conduct and organizational rules in the UK Markets in Financial Instruments Directive (MiFID II): research and best execution reporting.

The consultation proposes to:

  • change the inducements rules on research to broaden the list of permitted minor non-monetary benefits to include investment research on small and medium-sized enterprises with a market cap below £200m and fixed income, currencies and commodities research, so that they would not be subject to the inducements rules;
  • change how the inducements rules apply to openly available research and research provided by independent research providers; and
  • delete the rules imposing obligations on execution venues and investment firms to make RTS 27 and RTS 28 best execution reports.

The proposals on research rules apply to one of the most controversial parts of the MiFID II overhaul of securities regulations. The UK, which has a vast number of asset-management firms affected by the rules, was a strong supporter of unbundling when the MiFID II research rules and inducements rules were originally drafted before Brexit.

The consultation closes on June 23.

FCA Consultation